In 1776 a Scottish professor named Adam Smith (1723-1790) published the most influential book on economics ever written. Entitled The Wealth of Nations, this book directed withering attack against earlier notions of how nations attain wealth and power. An advocate of free trade and laissez-faire, trusting in the "Invisible Hand" of unregulated market forces, Smith called this older viewpoint "mercantilism." Under mercantilism, every nation sought to sell more than it bought. To maximize the state's welfare, government tried to regulate and protect industry and commerce. Colonies existed to enhance national self-sufficiency, provide essential raw materials, and serve as a market for finished products.
In this selection, Thomas Mun (1571-1641), a seventeenth-century English economist, offers a succinct summary of the mercantilist ideas Smith later repudiated and explains how overseas colonies can contribute to the nation's wealth.
1. First, although this Realm be already exceedingly rich by nature, yet might it be much increased by laying the waste grounds (which are infinite) into such employments as should no way hinder the present revenues of other manured [cultivated] lands, but hereby to supply our selves and prevent the importations of Hemp, Flax, Cordage, Tobacco, and divers other things which now we fetch from strangers to our great impoverishing.
2. We may likewise diminish our importations, if we would soberly refrain from excessive consumption of forraign wares in our diet and rayment,...which vices at this present are more notorious amongst us than in former ages. Yet might they easily be amended by enforcing the observation of such good laws as are strictly practiced in other Countries against the said excesses; where likewise by commanding their own manufactures to be used, they prevent the coming in of others....
4. The value of our exportations likewise may be much advanced when we perform it ourselves in our own Ships, for then we get only not the price of our wares as they are worth here, but also the Merchants gains, the charges of insurance, and freight to carry them beyond the seas....
England's Treasure by Forraign Trade, New York, 1903 ed., 9-12